+ All Categories
Home > Documents > Us Es Us Retail Retail Shopping Ro

Us Es Us Retail Retail Shopping Ro

Date post: 03-Apr-2018
Category:
Upload: ohpszzbm
View: 220 times
Download: 0 times
Share this document with a friend

of 16

Transcript
  • 7/28/2019 Us Es Us Retail Retail Shopping Ro

    1/16

    IBM Center for Applied Insights Smarter Retail

    The value of a smartershopping experience

    Exploring the benefts o creating dierentiatedcustomer relationships

  • 7/28/2019 Us Es Us Retail Retail Shopping Ro

    2/16

    2 The Value o Smarter Shopping Experience

    Todays retail environment is undergoing a dramatic shit

    as consumer expectations reach unprecedented highs.

    With 4.5 billion mobile phones,1 2 billion Internet users2

    and 750 million active Facebook users,3 new consumer

    touch points are evolving at a rapid pace. Consumers are

    embracing these and numerous other touch points along

    with modern technologies, incorporating rich inormation,

    price transparency and real-time connectivity into their

    buying decisions, signicantly impacting the shoppingexperience in ways we wouldnt have anticipated just a ew

    years ago. Traditional methods o marketing are quickly

    becoming obsolete, superseded by innovative approaches

    that engage consumers in a more timely, relevant manner.

    Retailers must adapt by providing a rich customer-unique

    experience that refects a more inormed, empowered and

    demanding consumer: a smarter consumer.

    To win in todays increasingly competitive marketplace, it

    is imperative or retailers to understand how consumers

    engage with their brand across all possible points o interac-

    tion. No longer is a one-size-ts-all approach good enough,as todays smarter consumers demand that retailers meet

    their unique needs and timerames. Retailers must engage

    consumers with timely, relevant interactions while providing

    a seamless experience across all touch points and consistently

    delivering on their brand promise. This requires retailers to

    transorm their product-centric, push-based operating model

    and adopt an experience-centric, pull-based approach driven

    by unique insights about individual consumers.

    Consider a scenario: A woman walks intoa store and spots a pair o shoes she likes.Unortunately, shes told her size is notin stock. She turns around, pulls out her

    smartphone, and searches local and online

    merchants or availability and prices.By having easy, real-time access to relevant

    product inormation she is able to make avalue-based decision opting to purchasethe item right there in the storebut roma competitor. The retailer may have been

    successul at getting her through the door,but by not empowering their sales sta with

    pertinent inormation, they missed a golden

    opportunity to convert her into a customer.

    Making this transormation is easier said than done, but

    the rewards can be immense. The deeper level o consumer

    engagement and intimacy that result rom providing a

    smarter shopping experience can create brand anity and

    generate loyalty through a relationship thats rewarding or

    both the retailer and their customers. Successul execution

    can mean both immediate and long-term benets or the

    retailer. According to our estimates, a group o 18 top retailers

    globally could see bottom-line increases in the range o

    US$3B to US$10B by ully adopting these strategies.

  • 7/28/2019 Us Es Us Retail Retail Shopping Ro

    3/16

    Corporate Marketing 3

    A gap between consumer expectation

    and retail realityAs consumer touch points continue to prolierate and

    expectations rise, 41 percent4 o retailers believe that those

    expectations outpace their ability to deliver cross-channel

    experiences. In reality, this gap between consumer expecta-

    tions and retail execution is more like a chasm. A recent

    study ound that 85 percent5 o consumers expect a seamless

    experience across all channels, however only 13 percent oretailers are able to deliver this type o consolidated cross-

    channel shopping experience.6

    This disparity between what consumers want versus what

    retailers can deliver, combined with the new normal o

    consumers demanding more value and trading down, poses

    both an enormous opportunity, as well as a grave threat or

    todays retailers. To capitalize on this opportunity, retailers

    need to deliver a smarter shopping experience; one that utilizes

    individual consumer insights to deliver timely and relevant

    interactions, resulting in dierentiated customer relationships

    based on mutual trust and value.

    Raising the bar: Defning a new

    shopping experienceWhat i a retailer could engage consumers at precisely the

    right time, with the right inormation, and the right oer, to

    motivate them to become a customer? What i a consumer

    could begin their shopping process on the web, stop that

    experience, and then resume where they let o as they enter

    the store, without repeating prior actions? The shopping

    experience o the uture will be many things but routine wont

    be one o them. Todays smarter consumers have unlimitedaccess and rich inormation, a powerul combination that

    they are using to redene shopping to meet their unique

    needs and timerames.

    Characteristics of the consumer-dened

    shopping experience

    Omnipresent:engrainedintoallaspectsofaconsumersdaily

    livesenabledbytheproliferationoftouchpoints,persistent

    connectivityandubiquitousaccess

    Deconstructed:acollectionofmultiple,discreteinteractions

    basedontheconsumersabilitytostartandstoptheirshop-

    pingprocessusingagrowingnumberoftouchpoints

    Collaborative: cooperativecommunicationsbetweenthe

    consumer,theirfriends/family,andtheretailer

    Contextual:focusedonindividualrelevancyandpersonalized

    serviceasconsumersdemandtailoredsolutionstomeettheir

    uniqueneeds

    Real-time Aware:locationandpresenceprovidethe

    foundationforproactiveandtimelyinteractions

    Experiential:focusedonhowtheconsumerexperiences

    productsandthebrand

    A true consumer-centric approach to the shopping process will

    allow retailers to create a clear dierentiation in the market-

    place by satisying the unique needs and expectations o the

    smarter consumer. But how do you get there?

    By developing the right business competencies, retailers can

    consistently deliver on their brand promise throughout the

    shopping liecycle. With deeper insights supported by a holistic

    view o consumer-relevant inormation, it becomes possible

    to understand consumers and be proactive in satisying their

    needs. Individual interactions can be designed to be timelyand relevant, with experiences shaped to refect consumers

    interests and liestyles. Perhaps most signicantly, retailers can

    build a strong relationship with their customers by ostering

    trust through open and continuous communication.

  • 7/28/2019 Us Es Us Retail Retail Shopping Ro

    4/16

    4 The Value o Smarter Shopping Experience

    A business competency model that illustrates how a smarter

    shopping experience can be created is shown in Figure 1.

    Figure 1: Delivering a smarter shopping experience takes a strategy, supported by new competencies, that places the consumer at thecenter of the business.7

    Source: Smarter Shopping Value Quantifcation. IBM Center or Applied Insights and the IBM Global Retail Industry. October 2011

    value

    maturity

    Delivering a unique shopping experience enables retailers to achieve differentiated

    life-time customer relationships.

    Relevant

    experience

    Precision

    marketing

    Prescriptive

    insight

    Integrated

    information

    Capture and consolidate product, inventory, order, market, and interaction data

    to provide a trusted view of consumer-relevant information

    Understand consumer and customer preferences, interaction history

    and motivations to determine the next best action

    Optimize marketing by channel and medium to deliver

    targeted consumer messages and offers

    Provide timely, tailored and seamless shopping

    experiences that can span multiple interactions

    within and across touch points

    Achieve differentiated lifetime

    customer relationships by consistently

    delivering on the brand promise

    Continuous

    dialogue

    Deliver a Smarter

    Shopping Experience

  • 7/28/2019 Us Es Us Retail Retail Shopping Ro

    5/16

    Corporate Marketing 5

    A closer look at the stages o

    smarter shoppingDelivering a smarter shopping experience requires a new

    way o thinking about how the organization operates and what

    business competencies are required as outlined in Figure 1.

    It represents a multiaceted transormation that spans people,

    processes, inormation and technology.

    To begin this transormation, many retailers have launchedindividual initiatives to address immediate short-term needs.

    In order to complete the journey, they will need to build on

    these initial investments and align their current and uture

    capabilities with a customer-centric strategy. By doing so,

    retailers can increase their ability to deliver the experiences

    consumers seek.

    This evolutionary path starts with a solid base o inormation,

    enabling retailers to create both a broad and deep under-

    standing o the consumer. With complete, accurate and trusted

    inormation in hand, they can leverage analytics to better

    understand consumers and uncover important trends. The

    insights gained can help the company allocate its marketing

    spend to communicate with consumers more eciently and

    eectively. As a result, it becomes possible to develop more

    tailored communications and targeted oers that are both

    timely and relevant, delivered seamlessly across all channels

    and touch points. Ultimately, retailers will be able to deliver

    personalized interactions that can lead to stronger, more

    protable relationships.

    The ollowing ve key competencies are required or

    retailers to realize the rewards o investment in a smartershopping experience.

    Integratedinformation Capture and consolidate product,

    inventory, order, market and interaction data to provide an

    accurate and trusted view o consumer-relevant inormation

    Prescriptiveinsight Obtain an intimate knowledge and

    understanding o consumer preerences, interaction histories,

    needs and motivations in order to determine the next best

    action to progress consumers in the shopping process

    Precisionmarketing Optimize marketing spend by

    channels and touch points, and deliver consumers targeted

    and personalized communications and oers

    Relevantexperience Provide timely, tailored and

    seamless shopping experiences that span multiple interac-

    tions and touch points to satisy consumer-specic needs

    and timerames

    Continuousdialogue Achieve dierentiated lietime

    customer relationships by ostering loyalty and trustthrough open and ongoing communication, and consistently

    delivering on the brand promise

    It is important to recognize that the level o maturity within

    and across each competency may vary greatly. Retailers have

    invested in capabilities to address their unique business needs

    and requirements. Most already have at least basic oundational

    capabilities in each o the competencies described above, but

    they still need to invest in order to progress in maturity. How-

    ever, these investments do not necessarily require a rip and

    replace approach or strategy. The competency model shown

    in Figure 1 is based on an interconnected set o capabilities some new and others existing that build on and reinorce one

    another to create the desired shopping experience.

    Howweputavalueonsmart

    Throughout this report youll see charts that provide insight intohow smarter shopping competencies can help deliver realfnancial benefts. This inormation is based on our primaryresearch, conducted with retail leaders around the world andsupported by secondary industry inormation. The research

    fndings were then vetted with industry experts and key retailexecutives. To develop the potential value ranges presented inthis paper we modeled a set o retailers across several keysegments to determine how smarter shopping competenciescould impact key retail value drivers including revenue, margins,SG&A efciency and marketing expense.

  • 7/28/2019 Us Es Us Retail Retail Shopping Ro

    6/16

    6 The Value o Smarter Shopping Experience

    Building the information foundation

    The rst stage o the smarter shopping journey is, in many

    ways, the most important because integratedinformation

    lays the oundation to execute the other competencies

    eectively. By integrating disparate consumer-relevant

    data rom multiple sources, retailers can improve visibility

    across the enterprise, generating a holistic, accurate and

    trusted view o consumer and operational inormation.

    The other competencies depend on this inormation inorder to ully realize their potential benets.

    Macys vision is to create a personalized customer experience

    that grows stronger each time customers interact with the

    brand, regardless o channel or store location. In order to

    support that goal, Macys knew that the key to success would

    be creating the right data management inrastructure. As a

    frst step, they broke down walls between various systems to

    provide marketing and cross-channel teams with a 360

    degree view o the customer. Macys knows that continued

    successul implementation will be a critical part o their vision

    o providing a dynamic customer experience.8

    As with every competency, retailers exhibit varying levels

    o maturity related to the management o consumer-relevant

    inormation. At the lowest level, inormation is managed

    tactically with little governance. The inormation at this

    level is incomplete, inconsistent and inaccurate. When

    inormation is managed by a ormal well-governed process,

    it becomes cleansed, normalized and organized into a set o

    integrated master repositories. Thats exactly what Macys did:

    They eliminated isolated silos o inormation to generate

    greater value by making available a 360 view o customer

    [As a multi-channel retailer] you can get this

    great inormation [rom] e-commerce [and]catalog [sales] about specifc customers, and yetyou lose that whole thing in [the retail] storeso how do you link those customers togetherso that you know the same customer whobought in-store buys [through] catalog [or]e-commerce? Hardline CMO9

    Integrated Information

    US$27M to US$93M

    (0.1% to 0.4% of revenue)

    Potential annual operating prot benets

    from Integrated Information solutions

    0%

    100% Profit from

    incremental

    revenue

    Contribution by value driver

    Increased SG&A

    efficiency

    27%

    73%

    Figure 2: Nearly three quarters of economic benet from informationintegration comes from sales, and general and administrative (SG&A)savings, due to reduced complexity and greater efciency.

    Ask yourself

    Towhatextentisyourinformationcentralizedintomasterrepositoriesforcustomer,product,orderandinventory?

    Doyouhaveaholisticandtrustedviewofallconsumer-relevantinformation?

    Isinformationcontinuouslyupdatedandaccessibleinreal-time?

    inormation to marketing and other cross-channel teams.

    Ultimately, to achieve the highest level o maturity,

    inormation is managed as a strategic asset, available in near

    real time, and trusted by internal and external parties.

    Integrated Information

  • 7/28/2019 Us Es Us Retail Retail Shopping Ro

    7/16

    Corporate Marketing 7

    Generating actionable insights

    With rich and accessible inormation on hand, the second step

    in the smarter shopping journey is to generate prescriptive

    insight. This goes ar beyond describing or even predicting

    how consumers will respond to a given value proposition.

    It provides specic recommendations about how to achieve

    particular objectives. The key to solving this puzzle is based

    on a retailers ability to analyze multiple dimensions about the

    consumer. By analyzing historical transactions, behavioral,aective and cognitive traits along with both implicit and

    explicit preerences, retailers can determine the next best

    action. That is, the one that motivates the consumer to make

    a purchase or take the next step in their shopping process.

    These insights and recommendations can be the dierence

    between a successul marketing tactic and one that doesnt

    achieve its desired objective.

    Putting inormation to work, Kroger implemented a

    new initiative called Customer 1st. The goal was to

    understand and treat its customers better. Using insight

    gleaned rom buying patterns, Kroger provides customers

    with personally targeted oers and relevant incentives.

    This strategy is having a positive impact according to

    David Dillon, Krogers CEO. I am pleased with the strong

    positive identical sales growth [3.8% in non-uel sales]

    we achievedOur Customer 1st strategy continues to

    deliver results through improvements in all our key areas

    we target: our people, our products, the overall shopping

    experience in our stores and prices. As a result, the total

    number o amilies we serve continues to grow and our

    most loyal customers are buying more with us.10

    Retailers that lack maturity in this area tend to manually

    generate insights through the use o spreadsheet-based reports,

    custom ad hoc queries and out-o-the-box reporting rom

    application vendors. The analysis is descriptive and backwards

    looking. As sophistication increases, consumer insights are

    Ask yourself

    Towhatextentareyourbusinessdecisionssupportedbyactionableinsights?

    Towhatextentareyouabletoincorporateunstructureddata(forums,blogs,socialmedia)intoyouradvancedanalyticefforts?

    Howaccuratelyareyouabletoanalyzeindividualconsumers?

    We can get a read on where our customeris headed aster than ever beore.[Analysis o social media data] givesus unbiased, immediate eedback

    on what the customer is doing withthe merchandise. Wet Seal CEO Ed Thomas11

    Figure 3: Over half of the projected nancial benet comes from improvedprot margins, generated through insight-driven initiatives such ascross-channel loyalty integration.

    Prescriptive Insight

    US$55M to US$185M

    (0.2% to 0.7% of revenue)

    Potential annual operating prot benets

    from Prescriptive Insight solutions

    100%

    Contribution by value driver

    Profit from

    incremental

    revenue

    Increased SG&A

    efficiency

    8%

    1%

    Reduced market

    expense

    20%

    Reduced inventory15%

    Improved margins56%

    0%

    systematically generated by advanced analytic capabilities, and

    supported by dashboards and what-i scenario modeling.

    Retailers at this level have seamlessly integrated predictive

    insights into their business processes and decision making.

    At the highest level o maturity, insights are created to provide

    prescriptive recommendations that direct retailers to the

    next best action. The winners in retail are those companies

    that live by these insights. The use o analytics is engrainedinto their corporate culture to a point where the art o retail

    is replaced by the science o retail.

    Prescriptive Insight

  • 7/28/2019 Us Es Us Retail Retail Shopping Ro

    8/16

    8 The Value o Smarter Shopping Experience

    Optimizing marketing effectiveness

    The days o marketing only to the masses are over, as

    consumers expectprecisionmarketing; timely, relevant

    and personalized communications and oers. To deliver the

    right communications, at the right time, in the right channel,

    retailers must optimize each and every marketing activity

    across the shopping liecycle. They need to understand

    which channels and touch points their targeted customers

    preer and careully balance those preerences against theirmost protable mediums to allocate the marketing budget

    accordingly. This is the type o precision todays smarter

    consumers demand.

    Through the implementation o a new CRM strategy, a

    specialty retailer was able to develop and deploy more

    targeted personalized marketing strategies. As a result, they

    now execute custom, individualized mailings that increase

    revenue and reduce overall production costs. This strategy

    supports a hybrid- or multi-channel market-

    ing campaign and shits the management strategy rom

    product-centric to customer-centric.12

    For many retailers, marketing at this level o precision is

    currently beyond reach. Retailers who lack both process

    and technology maturity typically manage and maintain

    marketing budgets and plans manually, using spreadsheets.

    Campaign activities tend to be directed toward the masses

    with little eciency or measurement. As retailers streamline

    processes and leverage advanced technologies, their level

    o maturity increases to a point where budgets and plans

    are systematically managed with an integrated workfow.

    Ask yourself

    Howeffectivelyareyouabletocreate,manageandmeasuremarketingbudgetsandplans?

    Isyourmarketingbudgetoptimizedtothechannelsandtouchpointsthatwilldeliverthegreatestreturnoninvestment?

    Towhatextentareyouabletocreateanddeliverpersonalizedcampaignsconsistentlyacrossallchannels?

    Figure 4: As marketing activities become more effective and efcient, mostnancial gains are attributable to reduced marketing expense.

    Precision Marketing

    US$33M to US$94M(0.1% to 0.4% of revenue)

    Potential annual operating prot benets

    from Prescision Marketing solutions

    0%

    100%

    Contribution by value driver

    Profit fromincremental revenue

    Increased SG&A

    efficiency

    17%

    8%

    Reduced market

    expense

    59%

    Improved margins16%

    Campaign activities are directed toward targeted, pre-dened

    customer segments, and eectiveness is regularly assessed.

    Precision Marketing

    We have to sell in a way the customerwants to buy. Dev Mukherjee, President, Sears Home Appliances15

    At the highest level o maturity, budgets and plans are

    actively managed via automated alerts, and continuously

    revised and optimized to achieve the desired outcome.

    Campaign activities that are multi-wave, cross-channel

    and personalized to individual consumers become not only

    easible, but also economical.

  • 7/28/2019 Us Es Us Retail Retail Shopping Ro

    9/16

    Corporate Marketing 9

    Tailoring the shopping experience

    Todays smarter consumers have loty expectations o the

    shopping process; a relevantexperience that is also seamless

    and timely. Gone are the days o the retailer controlled

    shopping experience, where they could employ a one-size-

    ts-all approach and dictate which touch points consumers

    should use to shop. Consumers demand the reedom to shop

    in any channel, at any time, in any location, while expecting

    retailers to deliver an experience that is contextually relevantand seamless so they can easily accomplish their shopping

    objective. This new retail imperative is about delivering a

    tailored shopping experience. One that is meaningul to the

    consumers immediate needs and aligned with past interactions,

    while aording them the control to shape experiences that

    refect their interests and liestyles.

    Savvy retailers are integrating inormation to create a quality

    customer experience. To meet its customer demands

    Orvis implemented new technology that provides accurate

    and timely behavior-based cross-sell recommendations

    on its website. Revenues rom product recommendations

    jumped by 70 percent and now account or at least 6 percent

    o site revenue.14

    Just as with every competency along the smarter shopping

    journey, there are varying levels o capabilities in existence

    today. Many retailers have chosen to optimize one channel

    leading to an inconsistent and ragmented experience or

    consumers who shop across multiple channels. Consumer

    interactions tend to be generic and not tailored to individual

    needs and preerences.

    The goal [o oering a relevant experience]is to take our store to wherevercustomers are as opposed to makingthem come to us. Specialty Retail; EVP Marketing13

    Figure 5: The ability to deliver a relevant shopping experience has thepower to increase revenue and improve margins.

    Ask yourself

    Howwellareyouabletodeliveratimely,relevantandpersonalizedshoppingexperience?

    Towhatextentcanaconsumershopacrossmultiplechannelsinaseamlessmanner?

    Areyouabletointelligentlysourcecustomerordersbasedonmultiplefactorsincludingitemavailability,

    protability,andqualityofservice?

    Relevant Experience

    US$78M to US$319M

    (0.3% to 1.3% of revenue)

    Potential annual operating prot benets

    from Relevant Experience solutions

    0%

    100%

    Contribution by value driver

    Profit from

    incremental

    revenue

    Reduced inventory

    38%

    15%

    Increased SG&A

    efficiency

    11%

    Improved margins36%

    As inormation becomes more consistent and readily

    available across channels, the retailers ability to drive a

    relevant experience improves. The shopping experience is

    consistent and delivered seamlessly within a given touch

    point, and interactions are tailored based on historical

    transactions. At the pinnacle, the shopping experience is

    timely, relevant and seamless across all touch points, and

    interactions are personalized in real time based on current,

    past and predicted behavior.

    Relevant Experience

  • 7/28/2019 Us Es Us Retail Retail Shopping Ro

    10/16

    10 The Value of Smarter Shopping Experience

    Developing differentiated relationships

    A retailer that is open to listening and communicating with

    its customers, essentially establishing a two-waycontinuous

    dialogue, can create a trusting partnership with their

    customers and not be just another retailer. It does not matter

    i you are big or small, a web pure-play, or a multi-channel

    retailer the key is to nurture a mutually benefcial relation-

    ship in which customers eel that the retailer is looking out

    or their best interests.

    Todays consumers desire an experience similar to that o

    the neighborhood corner store where they were once

    greeted by name and with a warm smile. Store employees

    knew their customers preerences, purchase history, current

    and uture needs, and welcomed their input and eedback.

    What does smarter shopping look like?

    Retailers who are able to transorm their operating model

    by inusing the consumer-dimension into the shopping

    process stand to grow market share and proftability.We created a short video that depicts the benefts rom

    investments in capabilities to deliver unique experiences

    to individual consumers.

    Visit ibm.com/retail/theshoppingexperience or a

    glimpse into the uture o retail.

    Over the years, retailers seem to have lost this one-to-one

    relationship with their customer. The key or sustainable

    success is the ability o retailers to recapture the customer

    insight they instinctively had decades ago and harness it into a

    systematized and repeatable process. This will allow them tocontinuously deliver a dierentiated shopping experience

    without incurring the high costs o completing it manually.

    Our customers are asking us to know them,

    empower them, offer them and support them.Were inclined to listen. Specialty Retail, SVP & GM16

    Figure 6: Our model demonstrates that an ongoing dialogue promptsconsumers to buy because o greater afnity, which drives revenue

    and margins. Getting closer to customers also increases marketing eective-ness, making campaigns less costly.

    Ask yourself

    Isyourcompanycultureorientedaroundtheentirecustomerrelationshipbyfocusingontheirshortandlongtermneeds?

    Canyourbusinessprocessesadapttomeetindividualcustomerneedswithoutincurringexcesscomplexityandcosts?

    Isyourrelationshipwithyourcustomersbasedonmutualtrustandanopendialogue?

    Continuous Dialogue

    US$43M to US$182M

    (0.2% to 0.7% of revenue)

    Potential annual operating prot benets

    from Continuous Dialogue solutions

    0%

    100%

    Contribution by value driver

    Profit from

    incremental revenue

    Reduced marketexpense

    20%

    33%

    Improved margins47%

    Creating the conditions or and seamlessly executing a

    continuous dialogue sets the stage or much greater loyalty,

    brand advocacy and increased share o wallet.

    This competency, at its highest maturity, is a culmination o

    the previous our. At the very early stages o maturity, customer

    relationships are purely transactional, based on satisying an

    immediate customer need. Retailers tend to be product and

    transactional ocused with little to no visibility to individualcustomers. As maturity increases, relationships become value-

    based or both the customer and retailer. There is a desire,

    but lack o capabilities, to address the needs o each individual

    customer. At the highest level, there is a relationship that is

    predicated on an ongoing two-way dialogue based on trust,

    value and loyalty or both customer and retailer.

    Continuous Dialogue

    http://ibm.com/retail/theshoppingexperiencehttp://ibm.com/retail/theshoppingexperiencehttp://ibm.com/retail/theshoppingexperiencehttp://ibm.com/retail/theshoppingexperience
  • 7/28/2019 Us Es Us Retail Retail Shopping Ro

    11/16

    Corporate Marketing 11

    Making the case or investments

    in smarter shoppingThe journey to smarter shopping that weve outlined in this

    paper shows how retailers can achieve a undamental change

    in the nature o their customer relationships. Acting on the

    research-based insight in this paper is, we believe, critical in

    todays dynamic and ast-changing marketplace. The retailer

    that does not develop the right business competencies risks

    being let behind by its customers and competitors.

    The primary purpose o our research is twoold. First is the

    qualitative view: We worked to understand the competencies

    retailers need to develop in order to drive better business

    outcomes. Second is the quantitative case: We created a

    Figure 7: To determine the potential of investments in smarter shopping, we modeled a hypothetical US$25 billion soft-line retailer.These results indicate what may be possible after ve years, assuming a full range of investment and typical levels of business andIT sophistication. The same methodology that produced these results can be applied to any retailer to produce relevant results.

    rigorous, objective methodology to quantiy the potential

    benets in order to guide businesses as they build out the

    capabilities within those competencies. The results a potential

    annual pre-tax income benet o between US$236M and

    US$873M or a hypothetical retailer illustrate what can be

    accomplished in real terms by building out smarter shopping

    competencies that line up with business objectives.

    The combination o vision or transormation and the potentialnancial benets tells a compelling story. To dierentiate

    your business in a marketplace dened by smarter consumers,

    retailers need to adapt their current business practices to

    create a new, customer-centric, retail business model. Doing

    so should be both possible andprotable.

    Could this be you?

    Contribution by value driver

    Potential aggregate return: US$236M to US$873M (1% to 3.5% of revenue)

    Annual economic benets by competency.

    21%Reduced marketing expense

    9%Reduced

    inventory

    9%Increase

    SG&A

    efficiency

    40%Improved margins

    21%Profit from incremental revenue

    Integrated Information

    produces the greatest SG&A

    efficiency benefits.

    Investment Highlights

    56 percent of the return on

    Prescriptive Insights

    comes from improved margins.

    Investing in a Relevant

    Experience produces

    nearly equal gains in both

    revenue and margins.

    Precision Marketing helps

    the illustrative retailer cut market

    costs by millions.

    Total annual benefit from

    investment in a Continuous

    Dialogue for the hypothetical

    retailer: from 0.2 to 0.7 percent

    of revenue.

    100%0%

  • 7/28/2019 Us Es Us Retail Retail Shopping Ro

    12/16

    12 The Value o Smarter Shopping Experience

    Seize The OpportunityMost retailers are well aware o both the potential and

    challenges presented by the smarter consumer, but many

    are not yet prepared to ully deliver a smarter shopping

    experience. The rst step is to develop a strategic roadmap

    and understand how the competencies and capabilities can

    provide value.

    We can show you how to take advantage o your currentcapabilities and evolve them to support an end-to-end smarter

    shopping strategy. Our research demonstrated that each

    business has its own unique set o circumstances, while also

    showing common threads that can yield ongoing success. We

    encourage you to contact us to nd out more about the ull

    scope o our work and how it can be applied to your business.

    Author InormationDerek Franksis the Retail Industry Leader at the IBM Center

    or Applied Insights. Since joining the IBM Retail Store

    Solutions group in 2005, his work has ocused on using tech-

    nology to drive improved business results. He speaks at global

    retail conerences and collaborates with top retailers rom

    around the world. In his role at the IBM Center or Applied

    Insights, he is ocused on developing new thought leadership

    or retailers. He can be reached [email protected]

    Craig W. Stevenson is the Global Retail Leader or the

    IBM Shopping Experience Portolio. In addition to

    managing the portolio strategy and operations, Craig draws

    upon his years o experience to advise executive leadership

    o the worlds top retail brands on business strategies and

    technologies required to deliver a dierentiated and

    compelling shopping experience. He is a recognized industry

    leader who oten speaks at retail conerences and has been

    quoted in articles related to customer experience, mobile,e-commerce and multi-channel retail. He can be reached at

    [email protected]

    Scott Duby is the Global Retail Leader or IBM Enterprise

    Marketing Solutions. Scott has worked with a number o

    leading retailers to develop and shape their marketing strategy

    and vision. He ocuses on business process transormation

    enabled by technology. Scott brings a unique set o experiences

    having worked in industry as a merchant, research analyst and

    management consultant. His research has been published and

    he has been quoted in major publications. Scott can be reached

    [email protected]

    Nick Kadochnikov is a Key Research Analyst and Econometric

    Model Developer or the IBM Center or Applied Insights.

    Responsible or development o ROI models and simulation

    tools, Nick has over 12 years o experience using advanced

    data analytics to build predictive models, including propensity

    to buy, wallet estimation, and other revenue and orecasting

    models in the B2B space. Prior to joining IBM Nick led the

    development o e-commerce marketing strategy. Nick can be

    reached [email protected]

    mailto:mailto:defranks%40us.ibm.com?subject=mailto:mailto:craigs1%40us.ibm.com?subject=mailto:mailto:duby%40us.ibm.com?subject=mailto:mailto:nkadochn%40us.ibm.com?subject=mailto:mailto:nkadochn%40us.ibm.com?subject=mailto:mailto:duby%40us.ibm.com?subject=mailto:mailto:craigs1%40us.ibm.com?subject=mailto:mailto:defranks%40us.ibm.com?subject=
  • 7/28/2019 Us Es Us Retail Retail Shopping Ro

    13/16

    Corporate Marketing 13

    Special AcknowledgementsWed like to acknowledge the special contributions rom

    our core team without whose gracious contribution o time

    and expertise this work would not have been completed.

    Chris E. Hendren

    Don E. Gordon

    Ken Lawler

    Jim BengierJohn Stelzer

    Steve Winningham

    Cheryl Patchin

    Carrie Mahon

    Maureen Norton

    Connie Blauwkamp

    Therightpartnerforachangingworld

    At IBM, we collaborate with ourclients, bringing together businessinsight, advanced research andtechnology to help give them adistinct advantage in todays rapidlychanging environment. Through

    our integrated approach to businessdesign and execution, we help turnstrategies into action. And withexpertise in 17 industries and globalcapabilities that span 170 countries,we can help clients anticipate changeand proft rom new opportunities.

    AbouttheIBMCenterforAppliedInsights

    The IBM Center or Applied Insightsintegrates deep industry and

    analytical expertise to help chartthe course to new value or clients.The Center develops researchand tools with pragmatic guidanceand tangible outcomes to provokeorganizations to action.

    The model or smarter retailinvestment that emerged rom thisresearch, along with the hypotheticalvalue projections, is designed tohelp retailers gauge their potentialreturns rom their own, similarinvestments. The model can be

    scaled or dierent industry segmentsand maturity profles to produceindividually tailored results directlyapplicable to your organization.

  • 7/28/2019 Us Es Us Retail Retail Shopping Ro

    14/16

    14 The Value o Smarter Shopping Experience

    Notes

  • 7/28/2019 Us Es Us Retail Retail Shopping Ro

    15/16

    Corporate Marketing 15

    Notes

  • 7/28/2019 Us Es Us Retail Retail Shopping Ro

    16/16

    Please Recycle

    1 Global Mobile Phone Subscribers to Reach 4.5 Billion by 2012.Market Intelligence Center. March 2008.http://www.cellular-news.com/story/29824.php

    2 http://www.internetworldstats.com/stats.htm

    3 http://www.acebook.com/press/ino.php?statistics

    4 Baird, N. and Kilcourse, B.Enabling Buy Anywhere/Get Anywhere:The Future o Cross-Channel. Retail Systems Research. July 2011.http://www.retailsystemsresearch.com/_document/summary/1309

    5 Bengier, J. and Driscoll, J. Cross Channel Brand Interaction, 2010Consumer Preerences. Sterling Commerce and DemandWare. 2010.http://www.demandware.com/New-Consumer-Research-Report%

    3A-Cross-Channel-Brand-Interaction-2010-Consumer-Preerences/report_sterling_commerce,deault,pg.html

    6 Baird and Kilcourse.Enabling Buy Anywhere/Get Anywhere:The Future o Cross-Channel.

    7 Smarter Shopping Value Quantication. IBM Center or AppliedInsights. August 2011

    8 Source: IBM case study. http://www-01.ibm.com/sotware/success/cssdb.ns/CS/GMMY-88TG8L?OpenDocument&Site=dmmain&cty=en_us

    9 Source: Retail Executive Interviews, IBM Center or Applied Insights,May 2011

    10 Dillon, David B. Press Release: Kroger reports ourth quarter and ullyear 2010 results. The Kroger Co. http://www.thekrogerco.com/corpnews/

    corpnewsino_pressreleases_03032011a.htm11 Source : http://brandedretailer.com/reatailer_quotes.html#wet

    12 Source: IBM case study. http://www-01.ibm.com/sotware/success/cssdb.ns/CS/DJOY-8KV8JJ?OpenDocument&Site=dmmain&cty=en_us

    13 Source: Retail Executive Interviews, IBM Center or Applied Insights,May 2011

    14 Source: IBM case study. http://www-01.ibm.com/sotware/success/cssdb.ns/CS/SSAO-8LQ6P7?OpenDocument&Site=corp&cty=en_us

    15 Source: IBM Smarter Commerce Global Summit 2011 highlights.September 21, 2011. tp://tp.sotware.ibm.com/sotware/commerce/oers/globalsummit_21.html

    16

    Source: Retail Executive Interviews, IBM Center or Applied Insights,May 2011

    Copyright IBM Corporation 2011

    IBM Corporation1 New Orchard RoadArmonk, NY 10504U.S.A.

    Produced in the United States o AmericaDecember 2011All Rights Reserved

    IBM, the IBM logo, and ibm.com are trademarks or registered trademarkso International Business Machines Corporation in the United States,other countries, or both. I these and other IBM trademarked terms aremarked on their rst occurrence in this inormation with a trademark

    symbol ( or ), these symbols indicate U.S. registered or common lawtrademarks owned by IBM at the time this inormation was published.Such trademarks may also be registered or common law trademarks inother countries. A current list o IBM trademarks is available on the web atCopyright and trademark inormation atibm.com/legal/copytrade.shtm

    Other company, product, or service names may be trademarks or servicemarks o others.

    REE03003-USEN-0

    http://ibm.com/legal/copytrade.shtmlhttp://ibm.com/legal/copytrade.shtmlhttp://ibm.com/legal/copytrade.shtml

Recommended